Section 3: Extra exercise questions (for students' own practice) Question 1: The following Trial Balance was extracted from the books of Omega Shoes, a sole proprietor business, at 30 June 20X1: Additional information: 1. Inventories as at 30 June 2015 were RM47,342. 2. Non-current assets are to be depreciated as follows: : 20% per annum on cost Dr RM Motor vehicles RM Owner's equity as at 1 July 20X0 Drawings Inventories as at 1 July 20X0 Bank Office equipment : 10% per annum on net book value 3. On 30 June 20X1, the owner withdrew cash of RM1,250 for houschold expenses. No entry has been made in the books. 4. Utilities in the Trial Balance include an electricity bill covering the period 16 June to 15 July 20X1 amounting to RM900. 5. Allowance for doubtful debts RM907 is to be provided at the year end. 6. The bank loan was taken on 1 October 20X0 and no interest was paid during the accounting year. 86,631 8,500 54,387 153,246 6% Bank loan repayable in 8 years Trade receivables and payables 80,000 58,128 45,329 60,000 Motor vehicles at cost Accumulated depreciation-motor vehicles Office equipment at cost Accumulated depreciation-office equipment Sales and Purchases 6,000 25,858 Required: 386,768 4,586 15,844 7,287 4,858 600,235 3,854 18,129 (a) Prepare the Statement of Profit or Loss of Omega Shoes for the year ended 30 June 20X1; and Returns Discounts allowed and Discount received Bad debts (b) Prepare the Statement of Financial Position as at that date. Allowance for doubtful debts as at 1 July 20X0 678 18,000 1,452 3,626 7,295 45,853 12,587 7,895 858,513 Rent Insurance - motor vehicles - inventories Carriage outwards Salaries and wages Printing and stationery Utilities 858,513
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 2 images
